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Business Loan issuers in India
Business loan interest rates start from 8.15% p.a., depending on factors such as your credit score, business turnover, loan amount, repayment tenure, and repayment history. Comparing interest rates and loan features across different lenders can help you choose a business loan that best suits your financial needs.
Applying for a business loan through CreditMantri allows you to compare competitive loan offers from 20+ NBFCs in one place. This guide covers the latest business loan interest rates, eligibility criteria, processing fees, and expert tips to help you secure the best possible financing for your business.
Latest Business Loan Interest Rates of Banks & NBFCs (2026)
Compare the latest business loan interest rates offered by leading banks and NBFCs in India. The table below includes the starting interest rate, maximum loan amount, repayment tenure, and processing fee to help you compare lenders and choose the right business loan.
| Lender | Interest Rate (p.a.) | Maximum Loan Amount | Repayment Tenure | Processing Fee |
|---|---|---|---|---|
Bank of Baroda | 8.15% onwards | Up to ₹5 Crore | Up to 10 Years | Up to 2% + GST |
Indian Bank | 8.15% - 16.55% | Up to ₹25 Crore | Up to 15 Years | Up to 1% + GST |
Punjab National Bank | 8.25% - 15.65% | Up to ₹2 Crore | Up to 84 Months | Up to 2% + GST |
SBI | 9.10% onwards | Up to ₹500 Crore | Up to 15 Years | Up to 1% of the Loan Amount |
Canara Bank | 9.25% - 11.55% | Up to ₹20 Crore | Up to 10 Years | Up to 1.5% of the Loan Amount |
Bank of India | 9.35% onwards | Up to ₹5 Crore | Up to 7 Years | Up to 6% |
Union Bank of India | 9.40% - 14.80% | Up to ₹50 Crore | Up to 10 Years | As Applicable |
Kotak Mahindra Bank | 9.50% - 30.50% | Up to ₹1 Crore | Up to 60 Months | Up to 2% + GST |
Shriram Finance | 10.00% onwards | Up to ₹10 Crore | Up to 84 Months | Up to 5% |
South Indian Bank | 10.65% onwards | Up to ₹50 Lakh | Up to 60 Months | Up to 2% + GST |
HDFC Bank | 10.75% - 22.50% | Up to ₹75 Lakh | 12 to 48 Months | Up to 2% + GST |
Federal Bank | 10.85% onwards | Up to ₹2 Crore | Up to 120 Months | Up to 3% + GST |
Axis Bank | 10.99% onwards | Up to ₹75 Lakh | Up to 60 Months | Up to 2% + Applicable Taxes |
ICICI Bank | Secured: Up to 11.25% | Up to ₹75 Crore | Up to 84 Months | Up to 2% + Applicable Taxes |
Bandhan Bank | Secured: 11.69% onwards | Up to ₹1 Crore | Up to 60 Months | Up to 2% + GST |
12.00% onwards | Up to ₹90 Lakh | Up to 60 Months | Up to 3% + GST | |
12.00% onwards | Up to ₹50 Lakh | Up to 42 Months | Up to 4% | |
12.00% - 28.00% | Up to ₹1 Crore | Up to 48 Months | Up to 4.8% + GST | |
IDFC FIRST Bank | 12.99% onwards | Up to ₹1 Crore | Up to 48 Months | Up to 3.5% of the Loan Amount |
IndusInd Bank | 13.00% - 22.00% | Up to ₹50 Lakh | Up to 48 Months | Up to 3% + GST |
Lendingkart | 13.00% onwards | Up to ₹50 Lakh | Up to 36 Months | Up to 4% + GST |
Bajaj Finance | 14.00% - 23.00% | Up to ₹80 Lakh | Up to 96 Months | Up to 4.72% + GST |
Moneyview | 14.00% onwards | Up to ₹5 Lakh | Up to 60 Months | Up to 8% |
Poonawalla Fincorp | 15.00% onwards | Up to ₹1 Crore | Up to 60 Months | Up to 3% + Applicable Taxes |
DMI Finance | 15.99% onwards | Up to ₹25 Lakh | Up to 36 Months | Up to 3.5% + GST |
Piramal Finance | 16.00% - 25.00% | Up to ₹30 Lakh | Up to 10 Years | Up to 5% + GST |
YES Bank | 17.25% onwards | Up to ₹75 Lakh | Up to 72 Months | Up to 2.75% of the Loan Amount |
RBL Bank | 17.50% - 26.00% | Up to ₹50 Lakh | Up to 48 Months | Up to 3% + GST |
Aditya Birla Finance | 17.65% onwards | Up to ₹60 Lakh | Up to 95 Months | 2.75% - 3% |
Aye Finance | 22.00% onwards | Up to ₹15 Lakh | Up to 15 Years | 2.5% + GST |
What Are Business Loan Interest Rates?
A business loan interest rate is the annual percentage charged by a lender on the borrowed amount. It determines the overall cost of the loan and directly impacts your monthly EMI and total repayment amount. The interest rate offered to a borrower depends on several factors, including creditworthiness, business performance, loan amount, repayment tenure, and the lender's internal credit policies.
Fixed vs. Floating Interest Rates
Business loans are generally offered with either a fixed or floating interest rate.
A fixed interest rate remains the same throughout the loan tenure, ensuring that your monthly EMI does not change. This option provides predictable repayments and makes it easier to plan your business finances.
A floating interest rate is linked to an external benchmark, such as the Repo Linked Lending Rate (RLLR) or another benchmark adopted by the lender. If the benchmark rate changes, your loan interest rate and EMI may increase or decrease accordingly, depending on the terms of your loan agreement.
Reducing Balance vs. Flat Rate Method
Lenders also differ in the way they calculate interest on a business loan.
Under the reducing balance method, interest is calculated only on the outstanding loan amount. As you repay the principal through regular EMIs, the outstanding balance decreases, reducing the interest charged over time.
Under the flat rate method, interest is calculated on the original loan amount for the entire repayment tenure, regardless of the outstanding balance. As a result, the total borrowing cost is generally higher than that of the reducing balance method, even when the quoted interest rate appears similar.
Understanding these interest rate types and calculation methods can help you compare loan offers more effectively and choose a business loan that best matches your repayment capacity and financial goals.
Banks vs. NBFCs: Which Should You Choose?
| Factor | Banks | NBFCs |
|---|---|---|
Loan Amount | Generally offer higher loan amounts based on business eligibility. | Offer flexible loan amounts, typically up to ₹2 Crore. |
Interest Rates | Usually lower, subject to the borrower's credit profile. | Generally higher than banks but vary by lender and applicant. |
Documentation | Requires detailed financial and business documents. | Simpler documentation with fewer formalities. |
Approval Time | Longer due to comprehensive verification. | Faster processing and quicker loan approval. |
Best Suited For | Established businesses with strong financial records. | Startups, MSMEs, and businesses seeking quick funding. |
Factors Affecting Business Loan Interest Rates
The interest rate on a business loan is determined after evaluating your credit profile, business performance, and overall repayment capacity. Every lender follows its own credit assessment process, but most consider similar factors before deciding the applicable interest rate. Strengthening these areas can improve your eligibility for competitive loan terms.
Credit Score
Your credit score is an important indicator of your creditworthiness. A higher credit score demonstrates responsible borrowing and timely repayments, which may help you qualify for a lower interest rate. Lenders generally prefer applicants with a strong credit history and a consistent repayment record.
Business Turnover
Annual business turnover reflects the financial health and stability of your enterprise. Businesses with consistent revenue and healthy cash flow are often viewed as lower-risk borrowers, which can improve the likelihood of securing favorable interest rates.
Business Structure
The legal structure of your business, such as a sole proprietorship, partnership, limited liability partnership (LLP), private limited company, or other eligible business entity, may influence the lender's assessment. Lenders also verify business registration documents, GST registration, and other statutory records as part of the loan evaluation process.
Collateral
For secured business loans, offering collateral such as property, equipment, or other eligible assets can reduce the lender's credit risk. As a result, borrowers may receive more competitive interest rates. Unsecured business loans do not require collateral, but they may carry comparatively higher interest rates.
Business and Industry Profile
Lenders evaluate the nature of your business and the industry in which you operate. Factors such as business stability, market conditions, operational risk, and industry performance are considered when determining the applicable interest rate. Businesses operating in stable industries with consistent financial performance may receive more competitive loan offers.
Existing Financial Obligations
Your current loan repayments and overall debt burden also influence the interest rate. A lower debt-to-income ratio and a strong repayment history indicate better financial discipline, which can improve your chances of obtaining favorable loan terms.
Loan Amount and Repayment Tenure
The amount you borrow and the repayment period you choose can affect the interest rate offered by the lender. Loan terms are generally structured based on the lender's risk assessment and your repayment capacity.
Relationship with the Lender
A long-standing relationship with the lender, supported by a satisfactory banking history and timely repayment of previous loans, may strengthen your loan application. Existing customers with a positive repayment track record may be eligible for preferential loan terms, depending on the lender's policy.
How to Get the Lowest Business Loan Interest Rate
- Maintain a good credit score to improve your chances of qualifying for lower interest rates.
- Keep your business financials healthy with stable revenue and positive cash flow.
- Compare multiple lenders before applying to find the most competitive interest rate and loan terms.
- Borrow only the required amount to improve your repayment capacity.
- Choose a suitable loan tenure that balances affordable EMIs and overall interest costs.
- Maintain a strong repayment history by paying existing EMIs and credit card dues on time.
- Keep business documents updated, including ITRs, GST returns, and bank statements.
- Consider a secured business loan if you can provide collateral, as it may offer lower interest rates.
- Build a good banking relationship through regular transactions and timely repayments.
- Explore government-backed loan schemes if your business is eligible for preferential financing options.
- Review all loan charges, including processing fees, foreclosure charges, and other applicable costs before making a decision.
Frequently Asked Questions
1. What is the current business loan interest rate?
Business loan interest rates start from 8.15% per annum. The final interest rate offered depends on factors such as your credit score, business turnover, repayment capacity, loan amount, tenure, and the lender's credit assessment.
2. Can I negotiate my business loan interest rate?
Yes, to some extent. If you have a strong credit score, stable financials, or an existing relationship with the lender, you can often negotiate a better rate. Getting quotes from multiple lenders and comparing offers also gives you leverage during discussions.
3. What's the difference between fixed and floating interest rates?
A fixed rate stays the same throughout your loan tenure, so your EMI never changes. A floating rate moves with market benchmarks (like the repo rate), meaning your EMI can go up or down over time. Fixed rates offer predictability, while floating rates can work out cheaper if market rates fall.
4. Is a secured business loan cheaper than an unsecured one?
Generally, yes. Secured loans (backed by collateral like property or equipment) carry lower interest rates because the lender's risk is reduced. Unsecured loans are riskier for lenders and typically come with higher rates.
5. How is business loan interest calculated?
Interest can be calculated using either the flat rate method (interest is calculated on the full loan amount throughout the tenure) or the reducing balance method (interest is calculated only on the outstanding principal). The reducing balance method usually works out cheaper for borrowers, even if the flat rate looks lower on paper.
6. Does my credit score affect my business loan interest rate?
Absolutely - it's one of the biggest factors. A higher CIBIL or business credit score (750+) signals lower risk to lenders, which usually translates into a lower interest rate. A poor score can not only increase your rate but also affect loan approval itself.
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